Sanders and Warren Warn: Will 14 Trillion in Retirement Funds Face Bankruptcy Risks?

Written by: Micah Zimmerman

Translated by: AididiaoJP, Foresight News

Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are calling on the Trump administration's Department of Labor to repeal a rule that would open up retirement savings accounts in the U.S. to Bitcoin and other cryptocurrencies. The lawmakers claim that this move will jeopardize workers' financial futures while allowing President Trump and his family to profit from it.

On Monday, the three Democrats sent a lengthy 14-page letter to acting Labor Secretary Keith Sonderling. Sanders, Warren, and Bobby Scott (D-VA), the chief minority member of the House Education and Labor Committee, strongly condemned this rule proposed by the Department of Labor in March.

The rule would protect fiduciaries of 401(k) plans, allowing them to offer volatile assets—including cryptocurrencies, private equity, and private credit—as long as they can demonstrate that they have weighed relevant factors before offering these assets.

The letter states, "The proposed rule is harmful to American workers and violates the law, congressional intent, existing regulations, and case law."

What Impact Will the Rule Have

This proposal stems from an executive order signed by President Trump last August, which directed the Department of Labor to reevaluate how alternative assets are treated in retirement plans. Under current law, fiduciaries managing 401(k) plans must adhere to strict "prudent" standards—this requirement is rooted in the Employee Retirement Income Security Act (ERISA) of 1974 and reinforced by Supreme Court precedent.

Democratic lawmakers believe the new rules would reverse this standard. Fiduciaries would no longer be required to prove that they conducted due diligence; instead, they would only need to follow the process mandated by the rules to be presumed to have fulfilled their prudence obligations.

The lawmakers stated that this shift conflicts with decades of legal precedent and would expose approximately $14.2 trillion in U.S. 401(k) accounts to assets with extreme price volatility and limited regulation.

The Financial Industry Regulatory Authority (FINRA) has warned that cryptocurrency investments "exhibit greater volatility compared to traditional investment assets," and carry a "significant risk of total loss." Reports from the FBI indicate that losses from cryptocurrency fraud are projected to exceed $11 billion in 2025, making it one of the highest loss categories in cybercrime.

Trump Conflict of Interest Argument

The criticism from Democratic lawmakers extends beyond retirement policy and directly points to conflicts of interest. Trump's adult children manage the family's cryptocurrency business, which, according to The Wall Street Journal, has raised approximately $5 billion for the Trump family since the launch of digital currency last September.

The Trump family's cryptocurrency portfolio includes WLFI and USD1 tokens from World Liberty Financial, as well as the official Trump meme coin—which surged to over $75 during Trump’s inauguration in January 2025, only to crash to about $2 afterward.

The letter reads, "The aforementioned changes to prudent standards expand the opportunities for President Trump and his family to profit at the expense of taxpayers, workers, and retirees."

The consumer advocacy organization Americans for Financial Reform has also expressed similar concerns. Senior policy analyst Oscar Valdés Viera stated that "opening 401(k) accounts to these products could turn workers' retirement savings into tools resembling a Ponzi scheme, providing a lifeline to industries in desperate need of new cash."

The letter also cites data on poverty among the elderly: more than 22.8% of seniors in the U.S. live in poverty, compared to 5.1% in Denmark, 5.8% in France, and 12.6% in Germany—highlighting the risk that retirees cannot afford significant losses.

Government Defense

The Trump administration has described this rule as a measure to expand workers' choices.

Acting Labor Secretary Sonderling stated in a statement, "The days of the Department of Labor picking winners and losers are over. Our rules make it clear that managers must evaluate any potential product offerings by following prudent processes."

Secretary of the Treasury Scott B. Pruitt also expressed support, calling the rule "another step in leading President Trump’s 'golden age'."